The last 30 days for AUD/USD have passed with an upward movement against the trend. For the Australian dollar, this is an outstanding result in conditions of pressure on risky assets, as well as amid a strong US dollar and against the backdrop of a downturn in the Chinese economy. However, the price correction cannot last indefinitely, and there are still not enough incentives to reverse the trend.
In November, the RBA raised the rate by 25 points, taking into account the record for the last 32 years, inflation. Despite the positive assessment of this step by investors, in the future we can see the RBA lagging behind the US Federal Reserve, which raises the rate by 50-75 points each time. The economic downturn in China will add more tension for those who invest in AUD and may cause a wave of sell-offs.
USD was under pressure due to the congressional elections. According to the results of the elections, the Democrats did not receive a crushing defeat and can get a majority in the Senate. As a result, the dollar was weakened. However, perspective of an increase in the rate, as well as the demand for safe assets, stimulates demand for USD.
Next week, AUD/USD remains in the spotlight as data on industrial production volumes in China are published, and the minutes of the RBA meeting are published in Australia. Also, at the end of the week we will find out the unemployment rate in Australia. Despite the buy signals from technical analysis tools, we see that the quotes have already reached the overbought zone, which means they can turn down at any moment. We believe that the deals to SELL will be the most effective, since there is a good potential for a decline at the peak of the price correction. Therefore, our choice today are Sales.
